The latest DFA Survey results indicate that momentum in the property investor segment is set for an upswing, as we move into the spring season. When we last reported on our survey results, there was a dip in intentions, quite strongly linked to budget uncertainly. This has largely evaporate now other than continuing concerns about potential benefit cuts. Today we summarise some of the recent results which points in this direction.
First we look at prospective purchasing intentions across our segments. We see first time buyers still languishing, whereas solo investors, portfolio investors and uptraders are showing an increase in momentum compared with results from June.
House price expectations are pretty similar to earlier in the year, more are thinking prices are set to continue to rise, than fall.
Sole investors are being motivated by the prospect of appreciating property values, and better returns than deposits. They also continue to be attracted by tax breaks associated with investment purchases.
Superannuation investors are still in the market attracted by the tax efficient nature of this investment class, and backed by expectations of rising prices. They are also responding to lower deposit rates.
Looking that those SMSF funds with property, we see that most have 30-40% of their super aligned to property, but there is a wide spread. Absolute numbers of SMSF’s with property remain quite low, but it is growing.
So what is driving the resurgence of investors? We see that that overhand from the budget has mostly gone now, and funding is readily available. We also see that those who already bought, are coming back for more.
Finally, when we look at the budget factors in particular, we see that the high income levy still has an impact, whereas fears of changes to negative gearing has fallen, along with fears of changes to superannuation rules. We note though that concerns about reductions in benefits remains.
So, putting that all together, we think that investment lending will continue to outstrip owner occupied lending, and reach new records in coming months. We will incorporate this latest data into our models, and plan to publish an updated edition of the Property Imperative later in the year.
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